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I have aerial imagery which I want to stitch together to make a map. The images are geotagged with the coordinates of their location. I watched a tutorial video for mapknitter that said images would be able to place themselves on the map in the right location according to their coordinates

Yes you can...but only if your working in Civil 3d or Autocad. You need to download the lisp from autodesk first.
Import image to 0,0 then type the command "GEOREF" click on the border of image then wait for the image to be sent to its proper coordinates...now you can label the corners or item in image to verify coordinates.

Yes, you should be able to -- see the sidebar where the images are listed and it should show a button if it can detect EXIF GPS tags! This one doesn't show it but if your image has these tags, it should work:

We are also working on an improved means of doing this (a better UI, better placement) in an upcoming version. Thanks!

Hi @se18023! @warren and I are in the final stages of incorporating an "EXIF" module (better UI, as mentioned above) that will enable you to do just that!

Quoting your question here, "Can geotagged aerial images be automatically placed in the right location on the map according to their coordinates?", I'd say, the short answer would be yes, they can be, and even though some functionality regarding that exists as of now, as I mentioned above, we are currently working on an even better UI solution for the same.

Now for the long answer, let me throw some light on exactly how this happens. Have a look at the gif below, it's a demo of the improved solution I was talking about.

Now what exactly is happening under the hood, is that,

As soon as the user clicks the "geolocate" button on the toolbar, the module looks for any metadata (camera model, coordinates, etc.) associated with that image.

If the image has the said metadata attached to it, it extracts the GPSLatitude and GPSLongitude properties of the image (i.e., the coordinates where it was originally taken, or is associated with), along with its orientation (Orientation), direction (GPSImgDirectionRef), altitude (GPSAltitude), etc., for displaying relevant information in the console (see above) and geolocating as well.

Using the coordinates, we simply calculate the newer "corner points" of the image (see below) and "place" it on the map accordingly.

Thank-you for your reply and clearing that up. That would be a very useful feature to have indeed! Unfortunately it doesn't recognise the tags on my photos which means they cannot be automatically placed as of yet.